In the race to manufacture self-driving vehicles, there is no more important technology than lidar, which uses laser pulses much like radar to map the nearby area in minute detail. It is what lets a car tell the difference between a human leg and a branch. That’s the main reason Chinese internet giant Baidu made a big investment in American lidar specialist Velodyne in 2016.
But the technology isn’t just for civilian cars — it also makes U.S. military applications more lethal.
That Velodyne investment represents exactly the kind of increasingly aggressive Chinese investment to snap up cutting-edge technology that could give Beijing both an economic and a military advantage. And U.S. lawmakers, policymakers, and the Pentagon are all taking notice, desperate to find a way to make sure that China doesn’t vacuum up the technological edge that drives the American economy and gives the United States a military edge — for now. Similar alarm bells are ringing in Europe, with several countries scrambling to find ways to screen Chinese investment in high technology and critical infrastructure.
Bipartisan legislation gaining momentum on Capitol Hill and backed by the Trump administration would take aim at the avalanche of Chinese investment with an eye to protecting U.S. national security. By updating an obscure government committee that scrutinizes foreign investment, the legislation seeks to give Washington a chance to examine — and potentially block — joint ventures like the Velodyne investment that up to now have mostly flown under the radar.
Rep. Robert Pittenger, a North Carolina Republican, is one of the architects of the Foreign Investment Risk Review Modernization Act, which would overhaul the Committee on Foreign Investment in the United States (CFIUS). The measure represents a necessary response to China’s “well-coordinated, government-driven effort to exploit our laws to acquire military-applicable technologies used to modernize their army and intelligence agencies,” he argues.
“CFIUS is one of the few agencies we have to address national security ramifications in foreign investment, and it must be modernized to keep pace with current Chinese practices,” he told Foreign Policy.
Chinese foreign investment in the United States has skyrocketed in recent years, tripling in 2016 to $46 billion, according to the research firm Rhodium Group. Once focused on fossil fuels and old-school industries, Chinese money is increasingly flowing into advanced manufacturing, real estate and hospitality, and information and communications technology.
Despite a downturn last year, the scale of Chinese investment alarms some lawmakers, prompting new legislation which could come to the floor for a vote later this year.
But the bill lawmakers are proposing in both the House and the Senate doesn’t just update U.S. government oversight of incoming investments. It also takes aim at outbound investments and ventures by U.S. firms, especially investments that require the transfer of intellectual property, potentially expanding the scope of government oversight to cover a slew of high-tech transactions.
That expanded focus has horrified many tech firms and former government officials, who fear that it will choke off investment and hobble American firms trying to do business in cutting-edge sectors.